A Chicago developer is moving forward to put a boutique hotel, data center and retail in the South Loop, the final piece of a massive redevelopment in the next few years.

James McHugh Construction officials are hoping the new plan will resolve a year-old lawsuit seeking to force the firm to sell the land to the city. Work could begin in the next few months, officials said.

Originally, the city and the Metropolitan Pier and Exposition Authority, a state-city agency known as McPier, wanted to build a 1,200-room hotel on the property as part of a proposed $600 million redevelopment of the surrounding Motor Row district into an entertainment destination. But when the contested land became tangled in litigation, McPier opted to build a Marriott Marquis a few blocks east at Cermak and Prairie Avenue. Agency officials said they hoped to find a private developer for a boutique hotel on the contested land once the lawsuit was resolved.

The caveat was that the boutique hotel would have to be privately developed for the McCormick Place redevelopment project to stay on budget.

McHugh's new offer to add a 28-story, 500-room hotel on the disputed land at Cermak and Indiana, in addition to a long-planned data center, could satisfy the city's goals, while still securing the data center McHugh has been planning.

"When the headquarters hotel moved, we saw an opportunity that we could work out a scenario where everybody wins," said Michael Meagher, McHugh Construction senior vice president. He said the firm has an agreement with the city that the lawsuit will "go away" if the city approves the project. McHugh officals are scheduled to go before the Chicago Plan Commission on Thursday, and if their plans are approved, they could present their plans to the Chicago City Council in early October.

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Tina Feldstein, president of the Prairie District Neighborhood Alliance, a local residents group, said many of those she's talked to feel good about the proposal.

"It made perfect sense that (McHugh) would strike a deal with the city to build the hotel and also find a way to get his data center," Feldstein said. "So this hot debate between the city and McHugh turned into a deal."

A spokesperson for the city could not be reached for comment.

McHugh Construction called architect Joe Antunovich, president of Antunovich Associates, about four months ago to start working on a design, Antunovich said. Keeping the city's wishes in mind, he designed a boutique hotel, adding to the large number of hotels already planned for the city, including the 1,200-room Marriott just two blocks east.

Antunovich said his hotel would offer extended stay options and that it would be similar to a Hilton Garden Inn.

The six-story data center McHugh has been planning would be pushed south to mid-block on Indiana, with its entrance in the adjacent historic Rambler building, which would be renovated. The Rambler building would be used for parking for the data center and hotel, he said, adding concrete and ramps indoors, as well as an elevator.

Artwork, retail and restaurants would wrap around the corner from Indiana to Cermak, Antunovich said.

"We're really trying very hard to activate that corner," Antunovich said, "and activate a new gateway to this historic district that's had trouble getting on its feet."

Antunovich said the plan is to break ground on the data center by mid-November and to begin construction of the hotel sometime mid-2015. The data center would be finished in January 2016 and the hotel would be ready for guests by mid-2017.

A collaboration between the city, DePaul University and McPier aims to redevelop the historic Motor Row district into an entertainment destination. The project has been approved and will include a new 10,000-seat basketball arena for DePaul, the 1,200-room Marriott Marquis hotel at Cermak and Prairie Avenue, the rehabilitation of the American Book Co. building into meeting rooms and retail, and an additional data center.

The city gave $55 million in tax increment financing to McPier for the project. McPier, which will pay for the majority of the $600 million project, plans to finance it mostly with bonds backed by hotel revenues. McPier officials have said they hope to break ground on the two-year project early next year.